The Philippines should also charge tax evaders with money laundering to tighten its watch against ill-gotten wealth, the International Monetary Fund (IMF) said.
In its recent health check on the nation’s economy, the global authority said the Philippine government can further strengthen controls on money laundering by adding tax evasion to the list of predicate crimes related to illegal fund transactions.
Money laundering involves wealth secured through illegal means, but went through a different process or channel to make the accumulation of wealth legitimate.
Other unlawful activities linked to money laundering include kidnap-for-ransom, drug trafficking, plunder, robbery, piracy, smuggling, and terrorism financing, to name a few. When these crimes are committed, those charged could also face money laundering raps.
The Duterte administration repeatedly vows to go after individuals and companies who have not been paying the right taxes to the state, as it also hopes to raise revenue collections to fund various government projects.
The Anti-Money Laundering Council (AMLC), the Bangko Sentral ng Pilipinas, and even President Rodrigo Duterte have called on Congress to pass a bill that would lift the restrictive bank deposits secrecy law which have been in place for decades.
This crackdown should come alongside easing rules on deposit secrecy, which prohibit even government regulators from peering into bank accounts to check if an account holder’s money is more than what they declare to make.
“Relaxing the stringent banking secrecy law and establishing a robust beneficial ownership registry would not only support the AMLC’s efforts but also help in fighting tax evasion and corruption,” the IMF said.
Meanwhile, the multilateral lender said that tax reform would be crucial in funding more public projects.
“The pending bill to streamline and improve the oversight and design of current extensive tax incentive regime, currently being discussed in Congress, would make the regime more accountable and effective in encouraging business investment, job creation, and development,” the body said, noting that additional taxes on alcoholic drinks and e-cigarettes would further raise revenues.
“Tax reform will be essential for sustaining higher spending in support of longer-term growth while safeguarding fiscal sustainability,” it added.